ISLAMABAD (Reuters) - Taliban militants on Wednesday shot dead Pakistan's only Christian government minister for challenging a law that mandates the death penalty for insulting Islam, the latest sign of instability in a country where many fear radical Islam is becoming more mainstream.

Minister for Minorities Shahbaz Bhatti is the second senior official this year to be assassinated for opposing the blasphemy law. Provincial governor Salman Taseer was shot dead by his own bodyguard in January.

These killings, along with frequent militant attacks and chronic economic problems have raised fears for the future of U.S.-ally and nuclear-armed Pakistan, where an unpopular coalition government is struggling to cope.

Bhatti was shot by men in shawls in broad daylight while he was travelling in a car near a market in the capital, Islamabad, police said. The Pakistani Taliban claimed responsibility for the killing, saying the minister had been "punished" for being a blasphemer.

The windscreen of Bhatti's car had four or five bullet holes and blood covered the back seat. His driver, Gul Sher, said at least one gunman had taken part in the attack. A hospital spokesman said Bhatti, who had spoken out against the anti-blasphemy law, received several wounds.

"A white car stopped near us at a crossing," Gul, who was slightly injured, told reporters. "Four people were sitting in the car. One of them got out with a Kalashnikov... He came in front of the car and opened fire. I ducked. Minister died on the spot."

Witnesses said the attackers scattered leaflets signed by "The Qaeda and the Taliban of Punjab" at the attack scene, which read: "This is the punishment of this cursed man."

The blasphemy law has been in the spotlight since last November, when a court sentenced a Christian mother of four to death after her neighbors complained she had insulted Prophet Muhammad.

On Jan. 4, the governor of the most populous province of Punjab, Salman Taseer, who had strongly opposed the law and sought a presidential pardon for the 45-year-old Christian farmhand, was killed by one of his bodyguards who had been angered by the governor's stand.

Taseer's killer was lionized by many in Pakistan, raising fears that mainstream society's tolerance for secularists and moderates was being eroded by a more hardline version of Islam.

"This kind of attack was expected after the government's response to governor Taseer's assassination," said Amir Rana, director at the Pakistan Institute for Peace Studies. "Because of the government's very weak response ... it has encouraged the hardliners in society."

The government of President Asif Ali Zardari has repeatedly said it would not change the blasphemy law, and officials have distanced themselves from anyone calling for amendments.

Al Qaeda-linked Pakistani Taliban militants, fighting to bring down the state, had called for Bhatti's death because of his attempts to amend the law.

"He was a blasphemer like Salman Taseer," spokesman Sajjad Mohmand said by telephone from an undisclosed location.

Prime Minister Yusuf Raza Gilani condemned the killing and ordered the Ministry of Interior to investigate.

"PROTECTION FROM HEAVEN"

Bhatti was travelling without security, having left two police escorts at home, Islamabad police chief Wajid Durrani said.

"There was no protection when he left the house," the police chief said. "There was just a private driver with him. We don't know about the minister's thinking, but we had provided him two escorts because he was under threat."

Last month, in an interview with the Christian Post, Bhatti said he had received threats.

"I received a call from the Taliban commander and he said, 'If you will bring any changes in the blasphemy law and speak on this issue, then you will be killed,'" Bhatti told the newspaper.

"I don't believe that bodyguards can save me after the assassination (of Salman Taseer). I believe in the protection from heaven."

The January killing of Taseer was widely praised by hardline Islamist groups such as the Jamaat-e-Islami (JI), the country's largest religious party.

But the party denounced Bhatti's murder.

"We condemn this killing. This is a conspiracy and it may be an attempt to divert attention from the case of Raymond Davis," senior JI leader Farid Paracha told Reuters.

Davis is an American CIA contractor on trial for killing two Pakistanis. The case has been taken up by religious parties which have called for Davis to be hanged.

Bhatti's killing is likely to further deter any attempt to change the blasphemy law that mandates death for anyone who speaks ill of Islam's Prophet Mohammad.

Sherry Rehman, a former government minister and member of the ruling Pakistan People's Party, of which Bhatti was also a member, tried to change the law last year but the party leadership forced her to stop in the face of opposition.

The murder is sure to reverberate with those in the West concerned about extremism in Pakistan.

John Kerry, the U.S. senator who has been an unofficial envoy for the Obama administration in Pakistan, said the attack on another advocate of moderation was "particularly chilling."

The Vatican called for more protection for religious minorities in the country. Bhatti, a Roman Catholic, met Pope Benedict in Rome last September.

The Anglican Church, the Archbishop of Canterbury, Rowan Williams, and the Archbishop of York, John Sentamu, also warned of the impact on Pakistan's religious minorities.

"This further instance of sectarian bigotry and violence will increase anxiety worldwide about the security of Christians and other religious minorities in Pakistan," they said in a statement.

The law has its roots in 19th century colonial legislation to protect places of worship, but it was during the military dictatorship of General Mohammad Zia ul-Haq in the 1980s that it acquired teeth as part of a drive to Islamize the state.

Liberal Pakistanis and rights groups believe the law to be dangerously discriminatory against tiny minority groups.

Under the law, anyone who speaks ill of Islam and the Prophet Mohammad commits a crime and faces the death penalty, but activists say the vague terminology has led to its misuse.

Christians who make up about 2 percent of the population have been especially concerned, saying the law offers them no protection. Convictions hinge on witness testimony and often these are linked to personal vendettas, critics say.

Convictions are common although the death sentence has never been carried out. Most convictions are thrown out on appeal, but mobs have killed many people accused of blasphemy.

Trending On Reuters

REUTERS EXCLUSIVE

India's main public health programmes, aimed at millions of rural poor, have been in disarray for months because the government changed the way that over $1.3 billion in funds were distributed, according to data and letters seen by Reuters. Full Article | Graphic: India's health funding